I gave one of the ‘keynotes’ at this Minerals Industry conference, held during the annual ‘minerals week’ events in Canberra.

The theme of my presentation was – yet again -- how poor policy process over the past decade has produced a string of poor policy outcomes, with no real end in sight. (I am starting to find my recounting of this a bit like Groundhog Day, except that each time things seem to have altered for the worse.)

Giving the table from my Outlook talk (see below) another outing – supplemented by the RET and Gas Bans -- I noted thatundisputed first prize for ‘policy on the run’ was the Bank Levy. It appeared so fast, with so little process, that it took everyone by surprise (even, as I understand it, some officials in the Treasury). Against the usual tests for a ‘good’ tax, it strikes out not just on efficiency and equity, but even effectiveness. And the face-saving notion that it might nevertheless be justified as an implicit charge for government ‘guarantees’ does not hold water. If anything, it is likely to increase the risks to taxpayers (small as they may still be).

Right up there in poor policy land, the combination of elevated state-based renewables targets and bans on gas production have uniquely succeeded in forcing electricity prices to unprecedented highs and reliability to unprecedented lows. As noted previously, the present ‘wicked problem’ for policy is the creation of policy itself. It is a case of government failure, not market failure. We know from the Productivity Commission that the first phase of the price lift-off (pre-2012) was in large part related to network costs responding to regulatory signals; the second phase is attributable to (a) a RET-induced surge in intermittent renewable capacity, (b) the consequent retirement and non-replacement of large scale coal-fired base load capacity, and (c) high gas prices underpinned by a policy-induced shortage of domestic supply.

As things stand, the resulting energy policy ‘trilemma’ seems insoluble under the existing national abatement target. Given ongoing bipartisan attachment to it, one of the other two policy goals will have to give way -- either reliability or affordability or (as now) both. Part of the explanation for the position we find ourselves in is that for several years governments have encouraged the electorate to believe that, despite the relative fossil-fuel intensity of our economy, we could cut emissions at negligible cost and regardless of the instrument used. (Indeed official government modeling largely assumed the costs away.) Some state governments are even persisting in this deception.

Like Tolstoy’s famous observation about families in Anna Kerenina, each of the policy misadventures in the table has its own unhappy story. But there are also some broader themes.

Generally even in cases where there was a good start to a policy development process, outcomes were spoiled by poor engagement with stakeholders and the wider public, and ultimately poor implementation. Spin and sloganeering are increasingly substituting for explanation.

Along the way, we are seeing the language of public policy twisted into new forms. Tax hikes in the budget have become ‘saves’. And, wherever possible, taxes are referred to as ‘levies’ (like the Bank tax) or even, more coyly, ‘prices’ (carbon tax). We also found during the latest round of superannuation reforms (watch that space) that the word ‘retrospective’ no longer has the meaning long ascribed to it. And of course the very word ‘reform’ has departed from the dictionary definition of ‘change for the better’ to mean just ‘change’ – or even change for the worse. Fairness has become the dominant criterion, with its interpretation going well beyond the traditionally Aussie ‘fair go’. A fair reform today is one in which there can be no losers, even temporarily, unless they are at the upper end of the income distribution: a definition that would have ruled out every important structural reform of the past.

Governments’ ability to hold the line in the face of political resistance is a pale shadow of what it was. For example, that GST reform was quickly raised and as quickly withdrawn on two separate occasions in the past few years (and under different PMs and Treasurers) is almost beyond parody.

The line of a previous Treasurer that good policy is good politics, or at least can be made so via good process, has been perverted to the contrary proposition ‘good politics mustbe good policy’. And the new metric by which a government’s policy performance is judged has become the volume of legislation it is able to steer through the Parliament.

How did it come to this? How might we extract ourselves? Each Groundhog Day weakens my confidence in seeking to answer the first question or even that doing so would help answer the second. Churchill famously spoke of the opportunities for reform afforded by a ‘good crisis’. But it would be better not to have to wait.

I was one of the panelists for the wrap-up session of this (always excellent) conference. It focussed on the political difficulties of reform today and the rise of populism. Other panelists were Paul Kelly, Jennifer Westacott, Glyn Davis and Melbourne Institute Director Abigail Payne. The session was chaired by David Uren, who wrote an overview piece about the conference in The Australian on Tuesday 18 July.

In my remarks I agreed that reform is undoubtedly a more challenging proposition these days. The politics are tougher, the media less supportive, the public less trusting. And howls of protest greet any initiative that has a hint of a loser.

But real reform has never been easy. Before giving up we need to ask if we have been trying hard enough. According to a major OECD study, success depends on solid preparation, extensive consultation and effective political selling. These have been lacking in more recent times. Underprepared policies are being foisted on an unprepared public. As a result there has been a succession of policy misfires and reversals in Europe and North America, and not least in Australia.

Take tax. A big ticket reform item like the GST was abruptly raised here and just as abruptly dropped, without explanation. Corporate tax reform has been heavily compromised. Personal income tax rates have been going the wrong way. And then we get a distortionary tax on selected banks literally out of left field.

Much public policy is being made on the run, when it needs more than ever to be well prepared and properly justified and explained. The table tells the story. As a consequence, too many policy and reform initiatives are failing the dual test for 'success' of (a) being likely to do good and (b) being accepted as such by the community. As noted both in David's article and at conference, if this doesn't change it is hard to be optimistic about Australia's future living standards. While the environment for reform is clearly more challenging, that is unlikely to change. The only way forward is for governments to lift their game.

I gave the Infrastructure Oration 2017 on Thursday night -- an annual event run by Infrastructure Partnerships Australia in conjunction with their annual awards.

My intention was to focus on the economics of infrastructure policy, but with the energy imbroglio building I found myself preoccupied again with the political, or at least political economy, issues that are bedevilling public policy in that and other areas.

That an energy crisis induced by government regulation is being blamed on the private sector is a sign of the times I guess. But it is part of a pattern of poor policy development giving rise to unintended consequences from which nothing seems to be learned, leading to further rounds of poor policy. Such dysfunction is commonly attributed to the 24/7 media and the ‘toxic politics’ that greets any government policy initiative. But these are not going to change any time soon. In fact they could well get worse. The only way we can get back onto the policy high road, it seems to me, is for government to do what it can to improve its own performance in devising good public policy and ‘selling’ it effectively. As noted also in my previous presentation below, there is plenty of scope to do better before we abandon hope!

My paper can be found HERE, and is listed with others in the ‘publications/speeches’ section of this website.

In stepping down as Chief Executive of ANZSOG, I have bought myself more time to spend thinking and writing about public policy -- with fewer constraints on what I can say. (This is the first in a policy commentary series.)

An early opportunity came with an invitation from Greg Lindsay at the Centre for Independent Studies to speak at one of their ‘leadership lunches’. This took place on 2 March at their pleasant new premises on Macquarie Street.

The assignment was to revisit the ‘to do list’ of reforms I compiled in 2012 prior to leaving the Commission. This had been prompted by a remark by Glenn Stevens that if governments really wanted to do something about Australia’s failing productivity performance, there were many suggestions in Productivity Commission reports and they should simply ‘go get the list and do them’. My ‘to do list’ sought to make this a little easier.

However it came as no surprise to find that, five years later, very few items have been ticked off, even partially. There have been some isolated advances, such as the decision to finally stop throwing good money after bad at the assembly operations of foreign auto companies (amounting to over $30 billion dollars from Australian taxpayers in the past two decades alone). But these tended to be offset by counter examples (such as the procurement of those costly and untried homemade submarines – 12 for the price of 24). The real priorities on the productivity reform list, like workplace regulation and taxation, have stood still or gone backwards.

Meanwhile, a variety of policies introduced since then are candidates for future reform, including ever-rising renewable energy targets and subsidies: through which our governments have collectively managed to sabotage Australia’s comparative advantage in low cost, reliable energy – for negligible (or, properly assessed, negative) environmental benefit.

Most of my talk -- Of lists undone: too hard or not trying?-- explored why there has been so little real reform in this new century, and so much poor policy instead. I could think of only three possible reasons: (a) ‘institutional amnesia’ (the subject of Laura Tingle’s Quarterly Essay), (b) tougher politics or (c) weaker policy capability. While there have been signs of all three forces at work, the last of them in my view is the underlying problem. A loss of policy capability within government – Commonwealth and State -- is palpable and multidimensional. It has emerged over the past 10-15 years under a style of government mercilessly but accurately lampooned in The Hollowmen TV series. A ‘Washminster’ hybrid that is proving antithetical to properly-informed policy.

Yet, if this diagnosis is correct, there is hope. Unlike the adverse changes evident in our parliaments and media, changes which are arguably reflective of changes in society itself, the decline in capability is not irreversible. Unless it is turned around, however, we cannot tell whether reform has truly become ‘too hard’, as many now seem to assume.

Improvements to the policy-making system have become an essential pre-condition for improvements in policy itself. As a close observer of this system, I am accordingly proposing two further ‘to do lists’ that, with effective leadership, seem eminently achievable and would make a significant difference: one focussed on the bureaucracy, the other on Ministers and their offices.

I will elaborate in a forthcoming publication. (Meanwhile a video of my presentation is available HERE.)